Challenges and Opportunities to Scale Up Payment for Ecosystem Services

Building capacities through South-South and Triangular cooperation for the implementation and strengthening of PES mechanisms in Costa Rica and Peru.

Towards a Solution

Over the years Peru has established legal, institutional and operational mechanisms for the assessment of public spending on ecosystem services making it possible to generate vital environmental and economic statistics. The project, entitled “Conservation and Sustainable Use of High Andean Ecosystems of Peru through Payment for Environmental Services” (MERESE), funded by the International Fund for Agricultural Development (IFAD) and the Global Environment Facility (GEF), invested US$1.6 million to support community groups to restore and preserve nearly 15,000 hectares of native forest, grasslands and high Andean wetland habitats. Participating communal groups have strengthened their capacities to design and implement restoration and conservation programmes and to increase their incomes.

In Costa Rica, a country with more than 30 years of consolidated PES governance, programmes are now being updated according to the needs and specific requirements of beneficiaries. PES mechanisms have incorporated a political and social element, not only contributing with financial resources but also valorizing widely recognized landscapes and ecosystem services, such as watershed and biodiversity protection, scenic beauty and greenhouse gases mitigation. For instance, the valorization of such landscapes helped to establish the Sustainable Biodiversity Fund, a successful initiative that is implementing innovative financing tools, such as the Green Debit Card. For each transaction made with the Card, 2 percent of the interbank commission is transferred to the Fund and invested in initiatives targeting fragile ecosystems and their communities.

Costa Rica has been able to achieve important objectives related to the reduction in deforestation rates, recovery of forest coverage and degraded lands (SDGs 13 and 15), thus contributing to national and global goals and becoming a reference for other countries in the region. These achievements caught the attention of Peru and stimulated the beginning of an institutional dialog between the two countries, facilitated by IFAD. This dialogue has resulted in a series of technical exchanges on how to implement and improve mechanisms for payment for ecosystem services.

In total, six virtual workshops, involving 86 experts from Peru and Costa Rica, were organized during the last half of 2020, allowing participants to exchange their experiences and best practices on PES initiatives. The discussions were structured around key topics, such as legal and regulatory frameworks, financing instruments, bio-businesses and the monitoring and evaluation of PES initiatives. The main outcome of these exchanges was a road map outlining strategies for the improvement of PES programmes, and suggestions on how to strengthen integration and the design of joint initiatives between the two countries.

Early in 2021 a high-level event was organized with the participation of representatives from Costa Rica and Peru to discuss the main outcomes of the workshops with a wider audience and to further explore potential areas for collaboration. The event was an important step for the continued high positioning of PES on the agenda of both countries, and to consolidate it as an important tool to contribute to the achievement of several SDGs.

The exchanges between Costa Rica and Peru on PES have helped both countries to increase their capacities for assessing and expanding programmes and initiatives that contribute directly to SDGs 11, 13; and 15 and its targets 15.a, 15.1, 15.3, 15.4 and 15.9. Despite having been organized in a context of significant uncertainty due to the COVID-19 pandemic, and in a virtual format, the exchanges assisted the participating institutions to highlight key aspects of the sustainability and permanence of PES initiatives, underpinning the need to seek long-term commitment from stakeholders, explore innovative funding sources and ensure suitable monitoring and accountability systems.